Many "Free Trials” Aren't Free: Beware of Negative-Option Programs
Negative-option program offers sound great on the surface but many have hidden fees lurking beneath.
The FTC won a $29.8 million judgment against Grant Connect and its operators for negative-option deceptive marketing. Several of the defendants behind “Grant Connect” have agreed to a permanent ban from marketing products and services. This ban resolves charges brought against them by the FTC.
The FTC also settled charges against Johnnie Smith, Juliette Kimoto, and four companies Kimoto owned all in connection to the “Grant Connect” operation. The settlements with Smith and Kimoto bar them from marketing certain products and services, similar to those that they allegedly offered to consumers. The settlement order leaves Smith subject to a monetary judgment, under which he will pay $45,000. Juliette Kimoto faces a judgment order of over $90,000 and will be required to turn over various personal assets as well.
Negative option billing practices allow a business to deliver goods and or services automatically and then charge the customer. The customer must then pay for the goods or services unless they specifically decline said goods and services in advance of the billing. This is all fine and legal as long as the consumer is fully informed of all terms and conditions in advance.
The problems arise when businesses are not truthful or whan scams come into play...